14 February 2018, Sweetcrude, Lagos — The Minister of States, Petroleum Resources, Ibe Kachikwu has said oil prices will never return to $100 per barrel again.
The minister made the statement during a visit to the Lagos Deep Offshore Logistics Base, LADOL yard on Tuesday.
Kachikwu while fielding questions from journalists after inspection of the ongoing equipment fabrication for the Egina floating production storage and offloading, FSPO vessel, said oil price will henceforth settle between $60-$70 per barrel.
“Oil price is not going to be $100 per barrel again. We are likely to stay within $60-$70 per barrel”, adding that “investment is key” to the Nigerian oil and gas sector.
The collapse in oil prices has led to a major short-term drop in investment in the oil industry, with global investment in production and exploration falling from $700 billion in 2014 to $550 billion in 2015, with spill-over to energy commodities.
Due to oil glut, crude oil prices ended 2015 below $40 per barrel, the lowest level since early 2009.
Spot prices for the international crude oil benchmark Brent averaged $52/b in 2015, 53% below the level in 2014 and 49% below the average price over 2010-14.
As a result, the Organisation of Petroleum Exporting Countries, OPEC and its partners, agreed to cut a combined 1.8 million barrels per day of output, prompting prices to rally to $70 per barrel earlier in 2018.
OPEC who boasts of an over 100 percent compliance with the cut deal among its members and Russia, its major partner, has since extended the deal twice, exempting both Nigeria and Libya.
However, Nigeria will join once its production reaches 1.8million barrel per day.
Nigeria produces between 2.2-2.8mbp/d before the commencement of the OPEC cut in January 2017.
OPEC is looking towards extending the deal beyond 2018.